What is the philosophy of money? Is money just an abstract tool that is used by humans or is there a philosophical foundation to it?
Having money is better than philosophizing about money. The majority of people would agree with this statement without any ifs or buts. Nevertheless, it is worth thinking about the philosophy of money. After all, money has an indispensably sociological and social character. As such, money does more to us humans than we are capable of doing with it. So we should try to understand its philosophical-sociological nature in order to be able to assess its influence on us.
Money in the actual sense only really arises from exchange. Interestingly, exchange also exists when there’s only one person around. This kind of exchange is called autistic exchange. A person enters into an act of exchange with oneself, often by exchanging as a present self with his future self. Autistic exchange thus arises from the intertemporal structure of the real world. Even for a single individual, then, money need not be meaningless because one can exchange money with oneself in time. Those who hoard or save are doing just that. Moreover - and this is how we commonly understand the term - exchange has an interactive component. Exchange is interaction with other people. Through exchange, things acquire an "objective" (better inter-subjective) value, since they are compared and weighed against each other. What is reflected in a specific monetary value is ultimately the expressive relationship between things.
Value condenses and concentrates in money. Money naturally acquires a sort of universality; everything and anything can be exchanged for money. This results in objectification of interpersonal relationships. Unlike in the barter economy, the baker no longer gives his bread in exchange for the shoemaker's shoes. Instead, the act of exchange is transacted through an abstract, universal medium of exchange. Money becomes exchange-determining. Greater freedom arises from the fact that human relationships become less important and more impersonal, which consequently creates a feeling of independence and self-sufficiency. Even if exchange partners would never meet each other directly in terms of goals, due to the abstract medium of exchange money they do not have to know about their opposing goals and can still interact with each other thanks to the mediation by money. Universality and value aggregation create more opportunities for individuals. Money is formless, mobile, and pliable to our will; its possession creates more freedom and an extension of one's power over objects.
The liberating power of money is probably generally underestimated today. Much more prominent are the reservations regarding money: Money rules and corrupts the world. For some, money is even the root of all evil. Among philosophers in particular, but also increasingly throughout society at large, money is given a hard time. One explanation for this can ultimately be found in the liberating power of money itself. Money is by definition an abstract, universal (medium of) exchange. The emphasis here is on the means. In all things, money is always a means to an end. Money evaluates, but does not value. The most trivial as well as the most beautiful, the most immoral as well as the most moral things can be had for money. This makes money suspect, even disreputable, in the eyes of many.
The special thing about money is that although it is a universal means, in the eyes of many people it seems to be increasingly turning into the only ultimate end. This process of economization and rationalization was also prominently taken up by Karl Marx and described by the term of alienation coined by him: Everything works for, with and because of money. In a world dominated by the circulation of money, only endlessly long, many-linked series of purposes exist, behind which any final purpose seems to evaporate. Only money itself finally becomes the all-determining dictate, the ultimate end qua itself.
Philosophically speaking, money is ultimately a thing that simultaneously bears the seeds of fertility as well as those of destruction, the tendency to liberation as well as alienation within itself. As is so often the case, opposites lie close together and the contradictions are inherent in a thing. An objective philosophical evaluation of money resembles a thing of impossibility. At the same time, such an understanding helps one to react more empathetically towards money and its excesses in the world. Money has advantages and disadvantages, and anyone who focuses only on the latter could throw the baby out with the bathwater.
It is important to note: Money lends wings to humanity but can also quickly end in the flight of Icarus. The objectifying and abstracting effect of money accelerated in particular with the creation of paper money. Thanks to the printing press, there was a physical multiplication of money, which until then had been curtailed by its real scarcity. The scaling of money via paper was followed by an explosion of material wealth. This scaling development has continued to this day. The printing press, paper money, and today finally electronic databases have allowed us humans to enter into a Faustian bargain that has capitulated humanity to unimagined heights. The detachment of money from a scarce, material reality, always given by precious metal money, turned out to be both a blessing and a curse. An ever more pronounced credit money expansion became possible, which demanded more and more from the economic individual. This was probably the most fruitful catastrophe that could ever have happened to mankind.
In the 19th century, however, there were still limits to the expansion of paper money. The link to gold ensured that money could not be created at will. Although this gold connection was repeatedly suspended, not least in the course of the world wars, money ultimately remained indirectly tied to a golden anchor. The breaking of the taboo finally followed in the 20th century. In August 1971, the gold pegging was finally removed by the USA with the closing of the gold window. Currencies no longer referenced to commodity money. What had started with direct exchange of goods developed into indirect exchange by means of physical money (paper backed by precious metals) and finally ended with immaterial fiat money with no reference to physical money anymore. Philosophically, a shift from immanence (actual things) to transcendence (referential signs) to relative symbols can be observed here. The latter are neither immanent nor transcendent but simply loose.
From a philosophical point of view, the historical development from commodity money to fiat money could be interpreted as the detachment from an economic absolute. For in a certain sense, gold functioned in the financial and monetary system in the same way as the idea of a God in metaphysics: as an ultimate anchor. The absolute is precisely that which is not contingent and therefore not relative. Gold could thus be seen as this one economic symbol that is to be interpreted as the ultimate anchor. Gold is a sign whose status as a mere sign must be denied in order to be able to meaningfully justify and give value to other monetary signs. Without this anchor, all monetary signs and symbols, all currencies and financial derivatives are merely relative. The abandonment of the gold standard is thus the economic equivalent of the death of God in philosophy. The one, like the other, is likely to have consequences that we will only gradually understand.
Today, the following seems common knowledge: As in philosophy, so in economics everything is relative. But if everything is relative, there is nothing that is not relative. The relative is defining everything. As such all that is relative turns absolute. Whether philosophy or economics, this absolutization of relativity seems to be gaining more and more ground. Thus today different ideologies clash with one another. They all claim to have and be the only truth. Since the absolute no longer seems to exist, then everything relative is somehow absolutely right. So insisting on an ideological point of view is not even wrong. Mutual understanding and interpersonal cooperation, however, are likely to become more and more difficult as a common foundation is increasingly lost. The numerous perspectives and schools of thought on money and economics, all of which contradict each other, seem to make this clear. Philosophically, one can therefore ask: Will the world perish because of this absolute relativity?